It has been about one year and eight months since the United States Supreme Court released its landmark decision in Facebook v. Duguid. Since then, numerous courts have incorporated Facebook into their opinions, with variations in their interpretations. For many plaintiffs filing suit under the TCPA, Footnote 7 of the Facebook has provided them with a fighting chance in many of these courts. On November 16, 2022, the Ninth Circuit Court of Appeals issued its own analysis of the breadth of the Facebook decision, and the application of Footnote 7, in Borden v. eFinancial. In time, as detailed herein, Borden may well prove to be the most definitive pro-defendant circuit court decision to date.
Facebook settled a longstanding circuit split by determining that a necessary feature of an autodialer under the TCPA is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called. As readers of this blog know, the TCPA, or Telephone Consumer Protection Act, was enacted to address telephone marketing calls and certain telemarketing practices. TCPA plaintiffs lost tremendous ground with the Supreme Court’s determination that the use of a “random or sequential number generator” modifies both “store” and “produce” language contained in the statute. However, opportunistic plaintiffs continued filing TCPA lawsuits by capitalizing on a single sentence in Footnote 7 of the Facebook decision. This sentence reads: “For instance, an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list.” The Borden ruling closed the door, at least in the Ninth Circuit, to rely on Facebook Footnote 7, ruling that plaintiffs that do so place undue emphasis on one sentence, while ignoring its context.
What Are the Facts of Borden v. eFinancial?
eFinancial filed a Motion to Dismiss, arguing that telephone dialing equipment must generate random or sequential telephone numbers in order to meet the TCPA’s autodialer requirements. The District Court for the Western District of Washington agreed with eFinancial and dismissed the matter. Mr. Borden then appealed to the Ninth Circuit.
How Did the Ninth Circuit Close the Facebook Footnote 7 Loophole?
In Borden, the Ninth Circuit held that equipment must have the capacity to randomly or sequentially generate telephone numbers in order to be deemed an autodialer. It arrived at this conclusion by examining the TCPA’s statutory text and the Supreme Court’s decision in Facebook.
The Circuit Court began its textual analysis by looking at the sentence structure of the TCPA’s autodialer definition. The TCPA defines an “automatic telephone dialing system” as equipment which has the capacity—
(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and
(B) to dial such numbers.
The clause “using a random or sequential number generator” modifies the phrase “to store or produce telephone numbers to be called.” The Ninth Circuit determined that it “makes the most sense” that the “number” mentioned in the modifier is the same as the “number” mentioned in the preceding clause. Accordingly, both must refer to telephone numbers. The Circuit Court then cited the definition’s repeated use of the word “number.” The first “number” mentioned refers to telephone numbers. The Circuit Court found that the legislature would not intend a different meaning for subsequent uses of the word “number” without clarification. Finally, the Circuit Court concluded that “number” and “telephone number” were used interchangeably in the autodialer definition because the TCPA uses them interchangeably in other parts of the statute, including the Do-Not-Call Database section.
Next, the Circuit Court examined Facebook To reinforce its notion that an autodialer must randomly or sequentially generate and dial a telephone number. This portion of Borden contains its most salient point. The Ninth Circuit explains that the Supreme Court granted certiorari to “resolve a conflict among the Courts of Appeals regarding whether an autodialer must have the capacity to generate random or sequential phone numbers.” The Circuit Court then examines Facebook’s public policy discussion. In Facebook, the Supreme Court focuses on one of the TCPA’s policy aims: to remove the threat of autodialers seizing emergency service telephone lines. If an autodialer tied up an emergency service’s phone lines, the Supreme Court reasoned, individuals in need risked severe detriment. Continuing its analysis with Facebook’s policy aim in mind, the Ninth Circuit in Borden reasoned that emergency services would never provide their dedicated lines to a telemarketer. Thus, emergency dialers only faced the risk of autodialers tying up their phone lines if dialing equipment generated actual telephone numbers.
The Ninth Circuit relied on a textual analysis and the Supreme Court’s decision in Facebook to determine that an autodialer must have the capacity to randomly or sequentially generate telephone numbers. The Circuit Court rejected Mr. Borden’s Facebook Footnote 7 argument, stating that it was an attempt to “divorce” a single sentence from the rest of the footnote and opinion. Accordingly, because the technology at issue dialed from a pre-determined list of telephone numbers, and did not have the capacity to randomly or sequentially generate them, the Ninth Circuit affirmed the District Court’s decision to dismiss Mr. Borden’s complaint.
Why is the Ninth Circuit’s Decision in Borden v. eFinancial Important?
For starters, the Ninth Circuit abides. It is important to remember that Facebook was appealed to the Supreme Court after the Ninth Circuit issued its pro-plaintiff opinion. The Supreme Court then reversed the Ninth Circuit and issued its landmark pro-defendant decision. With Bordenthe Ninth Circuit made clear that it respects precedent.
More significant, Borden has closed a major loophole for TCPA plaintiffs. Facebook was unequivocal in defining an autodialer as dialing equipment that has the capacity to use a random or sequential number generator to either store or produce phone numbers to be called. Unfortunately, the Supreme Court’s inclusion of Footnote 7, albeit unintended, provided somewhat of a backdoor for TCPA plaintiffs to continue filing claims, while ignoring the rest of opinion. A majority of federal courts have declined to give credence to a claim based on a single sentence “divorced” from the rest of Facebook. However, Facebook Footnote 7 still provided ground upon which TCPA plaintiffs could “blausibly” state a claim. The Ninth Circuit has now slammed that door shut with its decision in Borden.
Borden is a major decision for companies engaged in telemarketing. However, leveraging the nuances of the Borden ruling is as important as knowledge of the opinion itself.
Klein Moynihan Turco He maintains an extensive practice in the fields of Internet and mobile marketing law, consumer data privacy law, sweepstakes and promotions law, fantasy sports and gaming law, intellectual property and general corporate law. If we can be of assistance, please visit https://kleinmoynihan.com or call us at (212) 246-0900.